Russia’s wheat exports are almost twice as high as before the war

By Aine Quinn and Megan Durisin

(Bloomberg) – After a slow start to the season, Russia’s grain exports are booming as buyers are loading on its attractive stocks.

The country’s shipments of wheat — its main crop — almost doubled in January and February from a year earlier, data from Logistic OS shows. Buyers avoided freight earlier in the season when prices were less attractive, but are returning now that last year’s massive harvest is helping Russian grain rank among the cheapest in the world.

The recent boom shows shippers have overcome some of the financing and insurance problems fueled by sanctions against Russia. Prospects for Black Sea exports also come into focus as a deal allowing Ukrainian cargo to sail through a safe corridor is due to be extended in about two weeks. Shipments from both nations are helping to halt worsening global food inflation.

Ukraine, whose exports lagged far behind last season, wants to extend the grain deal by at least a year. Russia says it can only be extended if the interests of its agribusinesses are taken into account.

The demand for Russian grain is currently high. Seawheat shipments in January and February totaled 6.1 million tons, about 90% more than in the same period last year, according to Logistic OS ship statements.

Wheat futures in Chicago and Paris have fallen to their lowest levels in at least a year, and large Russian volumes could cap prices for the remainder of this season, Rabobank said. The market generally assumes that the deal, which runs until March 18, will be successfully extended, it said.

Food has not been included in sanctions against Moscow over its invasion of Ukraine, but restrictions on banks and state-owned companies have made trading more complicated. Although hundreds of thousands of tons of Russian fertilizer remain frozen in European ports, exporters have been able to ship vast quantities of grain.

Also read: The US is quietly asking shipping companies to ship Russian fertilizer?

Recent strong exports also come as sales were booked later than usual towards the end of 2022 as Russian wheat regained its competitive edge, said Andrey Sizov, managing director of consultancy SovEcon.

“The start of the campaign was slow considering the bumper harvest and the huge supply,” Sizov said. Russia has shipped 29.5 million tons of wheat so far this season, compared to 26.7 million tons last year, he estimates.

While volumes in Ukraine remain substantial, they are below the peaks reached late last year. The amount exported from the Black Sea in February totaled 3.35 million tons and the number of ships cleared for inspection – part of the deal – fell for a fourth month.

Kiev has attributed a slowdown in its exports since late last year to the sluggish work of Russian ship inspectors, one of the parties tasked with inspecting all ships sailing under the deal.

Including routes such as road and rail, Ukrainian volumes for the season are about a quarter behind last year’s pace.

© 2023 Bloomberg LP

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